Real estate case raises tricky issues

Real estate agent Greg Herman was found civilly liable for deceitful conduct after artificially driving up the price of a property, but he is legally allowed to keep working as an agent – a situation that is an “absolute disgrace" to consumers, a property lawyer said.

Melbourne-based plastic surgeon Chris Moss was awarded $200,000 in damages in a civil court case that shocked the real estate industry. County Court Judge Tim Ginnane ruled on Thursday that Mr Herman and RT Edgar, the real estate agency he was a director of when he sold the Toorak property, were liable for deceitful conduct.

Peter Mericka, a property lawyer at Lawyers Real Estate who was not connected to the case, said Mr Herman would be “permitted to continue to operate as an estate agent unless and until, the director of Consumer Affairs [Victoria] takes some sort of action".

A spokeswoman for RT Edgar said Mr Herman remained employed at the firm and the agency was seeking legal advice. “Because the verdict was so complex, they will not have any decision made on Greg Herman until Monday," she said.

A spokeswoman for Consumer Affairs Victoria declined to comment on the proceedings, but confirmed the court’s finding “does not trigger the automatic cancellation provisions of the Estate Agents Act 1980". The government department said in a statement it was aware of the issues raised by the court’s decision and was “currently reviewing the decision and the conduct of the agent with reference to the Fair Trading Act 1999 and Estate Agents Act 1980".

The practice of dummy bidding – where the agent or agency invents offers to drive up the price – is illegal in Victoria and NSW.

Real Estate Institute of Victoria chief Enzo Raimondo said the result of the case was “not good" for real estate professionals. Mr Raimondo said dummy bidding wasn’t widespread.

Buyers advocate David Morrell said agents were going to look over their shoulder after the ruling.